Stocks dropped on Thursday to close an unsteady trading day in the wake of the tech-related sell-off during the earlier session.
U.S. stocks beat shares across the globe by the biggest percentage in nearly a quarter century this year, fueled by large technology companies. Many investors are betting on the possibility that the rising interest rate and a slump in tech stocks could bring America’s streak of success to an end by 2022.
U.S. stocks finished lower all across Thursday and the Nasdaq Composite posting an enlightened bounce in the closing minutes of trading due to increasing Treasury yields as well as a tech-driven loss have weighed on Wall Street.
What were the major indexes’ results?
The Dow Jones Industrial Average DJIA dropped 170.64 points or 0.5 percent, and ended at 36,236.47.
The S&P 500 SPX was in the red, down 4.53 points (or 0.1 percent, at 4,696.05.
The Nasdaq Composite COMP dropped 19.31 points or 0.13 percent, and ended at 15,080.86
On Wednesday On Wednesday, the Dow industrials fell by 392 points or 1.1 percent The S&P 500 fell 1.9 percent, as did The Nasdaq Composite skidded 3.3%. For the Nasdaq it was the largest single-day percentage loss since February. 25.
What was the motivation behind the markets?
The selling in Wall Street continued Thursday, just a day after markets had been shaken by the publication of the minutes for that Federal Open Market Committee meeting in mid-December. They indicated that the officials had not only spoken about faster and more frequent interest rate increases, but also the more aggressive reduction of the $8.9 trillion debt than they did the previous time they reduced it.
Commentaries from St. Louis Fed President James Bullard on Thursday may be a bit more alarming for investors as the central banker stating publicly his belief that Bullard believes the Fed could raise its rates as in March.
“We’re going to have to show everyone that we will take action to keep inflation low and stable and try to hit our 2% inflation target,” Bullard made clear in prepared remarks for an event held on Thursday.
The yield of 10 year Treasury BX:TMUBMUSD10Y stood at 1.733 percent on Thursday, and has risen by around 24 basis points already in the year ahead according to Dow Jones Market Data.
The higher rates can be a problem for growth stocks which are heavily valued on the prospect of high earnings in the future. The ETF ARK Innovation ARKK is a proxy for high-risk tech companies, dropped by 7percent on Wednesday, and declined 0.6 percent on Thursday.
A glimpse of how this may play out was revealed on Wednesday, as Federal Reserve meeting minutes pointed to an increase in interest rates in March. Tech stocks were a target for investors which pushed down the Nasdaq Composite Index to its lowest level since February. U.S. shares fell further on Thursday.
The Dow Jones Industrial Average fell 170.64 points which is 0.4 percent down to 36,236.47. The S&P 500 fell 0.1 percent, and closed at 4,696.05. Its Nasdaq Composite slipped 0.1% to 15,080.86. The Nasdaq dropped around 4percent over the last two sessions of trading.
A number of tech stocks continued their decline, as investors shifted out of stocks with high valuations. Tesla and Netflix dropped over 2% per. In megacap tech, Apple lost 1.6%. Amazon declined 0.6 percent, and Alphabet dropped just 0.1 percent. Meta Platforms gained 2.5% however.
“Investors are trying to wrap their heads around what different leadership looks like: we’ve all been conditioned that tech is the winner all day every day and that is just not going to be the case this year,” said Liz Young, head of investment strategy at SoFi. “Finishing in 2021, there was lots of investors who were overweighted in technology. This is an opportunity to ensure that your portfolio is designed to be protected to headwinds” that are triggered by high-multiple technology.
- Stock Market Today: Tech Stocks Recover, Bond Yields Rise, Bitcoin Slides Barron’s
- Stocks rise slightly Thursday as Nasdaq bounces following 2-day rout CNBC
- Tech Selloff Prompts Bets Against U.S. Stock-Market Supremacy The Wall Street Journal
- U.S. stocks consolidate after rising rates spark tech selloff MarketWatch
- Investors dash out of US tech stocks in powerful market rotation Financial Times
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